Gold prices fell more than 1% to a two-week low on Thursday, driven by increased risk-off sentiment as trade tensions showed signs of cooling down, reducing gold's appeal as a safe-haven asset. The stronger USD also puts pressure on gold prices.
At 2:51 p.m. (Vietnam time), spot gold prices fell 1.8%, down to $3,230.24/ounce.
The USD index rose 0.5%, making gold - which is priced in USD - more expensive for buyers using other currencies.
"There is still hope that some trade deals will be signed soon, helping to maintain lower tariffs," said Giovanni Staunovo, an analyst at UBS. He added that this optimistic sentiment, along with a stronger US dollar, is putting pressure on gold.
US President Donald Trump said on Wednesday he has the potential to reach trade deals with India, Japan and South Korea, and has a very good chance to reach a deal with China.
The US economy contracted for the first time in three years in the first quarter of 2025, as businesses imported heavily to avoid higher taxes.
However, Federal Reserve (FED) policymakers say short-term interest rates will remain unchanged until there is clear evidence of inflation approaching the 2% target or a weakening labor market.
Investors are waiting for the non-farm payrolls report to be released on Friday for further clues on the Fed's policy direction.
If the jobs report is weak, the Fed is likely to cut interest rates further this year and that could help gold return to the $3,500/ounce mark in the coming months, Staunovo said.
According to Reuters' quarterly survey results, for the first time analysts predict that the average gold price this year will exceed $3,000/ounce.
The World Gold Council (WGC) said that total global demand for gold in the first quarter of 2025 increased by 1% over the same period, reaching 1,206 tons, including over-the-counter (OTC) transactions, mainly due to a 170% increase in investment cash flow.
Gold - a non-profit metal, considered a hedge against risks amid uncertainty, hit $3,500 last week.
Meanwhile, spot silver fell 1.5% to 32.11 USD/ounce; platinum fell 1%, to 956.82 USD/ounce; the price almost remained unchanged at 937.53 USD/ounce.
